SEC Weighs Tougher Stance
On Naked Short-Selling

By

Kara Scannell

Updated July 12, 2006 12:01 a.m. ET

The Securities and Exchange Commission, responding to criticism that it hasn't done enough to curb naked short-selling, is expected to propose changes to a current rule that would reduce the number of open short positions in stocks.

The proposed amendments to Regulation SHO, a collection of rules on short-selling, come amid heightened attention to the legitimate trading practice of making bearish bets on firms. Short-selling is when a trader borrows shares then sells them with the hope the stock drops, so he can buy it...